Thousands of small British businesses will go out of business if the new Government goes ahead with its employment law plans, HR leader Employment Hero predicts.
These plans come at a particularly tough time for small firms, with business insolvencies at a record high in 2023 and remaining high in the first half of 2024, alongside a recent crash in small business confidence and lower revenues than expected.
The new Government’s plans for employment law include:
Employment Hero believes some of these changes might make sense for larger businesses, but for those without huge compliance teams or outsized working capital the cumulative effect will lead to businesses closing or choosing not to hire much-needed staff.
Employment Hero UK MD Kevin Fitzgerald is suggesting that the Government exempt small firms from the proposed end to probationary or ‘trial’ periods, the most burdensome of the new regulations and the one that will stifle growth the most.
“Let’s be honest – small firms are still reeling from the pandemic. Last year 58% of them sought lending just to help with working capital – not to grow or invest – up from 37% pre-pandemic. They simply cannot take this onslaught on well-established hiring practices.”
“Obviously the Government is going to change employment law to some degree. But it could make these changes far less burdensome on the economy if it exempted all firms with nine employees or less from the changes to probationary periods. These businesses are the small shops and restaurants that keep our high streets humming, and some are the future bright stars of the economy, but they need time and space to grow.
“This exemption would still let the Government’s changes apply to about three quarters (74%) of the overall workforce. They get their political win while our smallest businesses get to keep operating and growing.”
“Probationary periods are of particular importance to these firms with just a handful of staff. Every new hire is a calculated risk and probationary periods are essential for making sure that firms can take a chance on people with less experience or different backgrounds. If this legislation passes, it won’t just stifle the growth of small businesses – it will also impact the wider jobs market and our UK economy.
“Any business of any size worried about the impact of the Government’s changes should consider using Employment Hero technology. We’ve built the world’s first Employment Operating System (OS) – an AI-powered platform to manage the entire employment lifecycle, from recruitment and onboarding to payroll and employee benefits. Employment Hero was created for Australia’s incredibly complex employment environment, and is now well-suited to keep up with every twist and turn of employment law in the UK.”
